Chapter 1 Segmant reporting

Question 1

What consititues a reportable segment?

Answer 1

A reportable operating segment is one having 10% of all revenue, including revenue from unaffiliated sales and from intersegment sales. (Combined sales)

Question 2

How should revenues for reporting segments be presented?

Answer 2

Must disclose separately the amount of sales to unaffiliated customers and the amount of intercompany sales.

Question 3

How are segments operating profit reported?

Answer 3

Operating profit by segments is based on the measure of profit reported to the “Chief Operating decision makes”. Interest expense, income taxes, and general corporate expense are not allocated to the divisnos solely for the purposes of segment disclousres, they may be allocated if that is how the segments report to the CHieft operating decision maker

Question 4

What wouldn’t be included in a segments operating profit?

Answer 4

Equity in net income of another company, general corporate expense, interest, income tax expense, and gains or losses on discontinued ops are all not included in segment profit unless they are included in the determination of segment profit reported to the Chief operating decision maker

Question 5

What must happen if a customer provides more 10% or more of the combined revenue of a company?

Answer 5

It must be disclosed on the financial statements.

Question 6

What is the requirement’s to be a reportable segment?

Answer 6

=10% of combined assets
=10% of revenue
=report to the COO.
-reported profit/loss greater than 10% of combined profit/loss of all operating segmetns that did not report loss

Question 7

What financial statement is not disclosed for reportable segments?

Answer 7

Segment cash flows